Net proceeds is a term that refers to what a seller receives once a home is sold, and the costs and expenses of the sale are deducted from the gross amount collected from a buyer. Depending on the value of the home, the costs may be just a marginal part of the gross proceeds, or they may constitute a large part of the gross proceeds. If you are concerned about the value of the home that you are selling and need help estimating the net proceeds, among other matters, the Boston real estate attorneys at Pulgini & Norton may be able to counsel you.Determining the Net Proceeds
When they are deciding whether to agree to a real estate deal, both buyers and sellers may need some help. It is important to remember that the net proceeds that are available to a seller of a home are different from the seller's equity. Many homeowners and homebuyers may not understand the costs involved in selling a home.
If you are selling residential real estate in Massachusetts, you should know the highest market value of your property to list it for sale and obtain good offers. However, there are different methodologies employed to figure out how much of the sales price you will actually receive, which is called the net proceeds.
The net proceeds need to account for various legal costs, as well as closing costs and the real estate agent's fee. In many cases, you will need to subtract the costs of the broker's commission, outstanding liens, a discharge tracing fee, recording fees, a final water bill, the seller's agent's commission, the buyer's agent's commission, excise tax, and closing costs from the gross sale price. Usually, a broker's commission is 5-6% in Massachusetts. You typically need to pay the full amount as the seller, and the buyer's agent receives a 50% share of the commission.
You should also factor in sales tax, known as Massachusetts tax stamps. The tax stamp in most of Massachusetts is equal to $4.56 per thousand dollars of your home sales price, paid to the State of Massachusetts. Certain districts have a slightly higher tax rate. The money that you pay in tax stamps is income provided to the registry where your home is located.
If you calculate that you will end up with negative net proceeds, you will need to provide cash at the time of the closing to pay off the mortgage. Your lender will only release the mortgage lien after being paid, and you need to obtain a mortgage payoff statement to know what amount will release the lien. You may also need to pay attorneys' fees. However, you may get credits back, such as prepaid property taxes or prepaid condominium monthly fees.Discuss a Real Estate Matter with a Boston Attorney
Sellers should have legal representation to review the documents associated with the sale of their home. Although this is an additional expense, it should ensure that the process goes smoothly and that a seller has a complete understanding of the sale as well as the net proceeds to expect. At Pulgini & Norton, our experienced Boston real estate lawyers can guide you through each step of securing a mortgage and entering into a residential property transaction. Our firm represents buyers, sellers, associations, and lenders in Hyde Park, Brookline, and Somerville, among other Massachusetts cities. Call Pulgini & Norton at 781-843-2200 or use our online form to set up a free consultation with a property transaction attorney.